Australia Inflation Rate Tops Forecasts

The annual inflation rate in Australia slowed to 3.5% in July 2026 from 3.8% in June, but remained above both expectations of 3.3% and the central bank's 2–3% target range. It was the softest increase since November 2025, as goods inflation moderated to an eleven-month low of 3.2%, while services inflation also eased to 3.7% from 4.0%. Housing inflation eased to an 11-month low of 5.0% (vs 6.8% in June), with electricity prices rising the least in four months. Inflation also eased for food and non-alcoholic beverages (3.2% vs 3.3%). Meanwhile, inflation accelerated for transport (1.6% vs 0.1%), while furnishing inflation remained steady at 1.6%. The trimmed mean CPI stood at 3.6% yoy, still the highest since September 2024 and above expectations of 3.5%, while the weighted median CPI rose 3.6%, after a 3.7% rise in June. On a monthly basis, the CPI rose 1.0%, marking the first monthly increase, surpassing expectations of a 0.8% rise and recording the fastest increase in four months.

Australia’s Q2 CPI reading came in “a touch softer” than expected, according to Reserve Bank of Australia Assistant Governor Sarah Hunter. She said headline inflation has continued to ease, although underlying price pressures, particularly from housing and services, remain persistent. Wednesday’s releases showed the country’s annual inflation eased to 3.9% in Q2 from a two-year high of 4.1% in Q1, though it remained well above the central bank’s 2–3% target band. Meanwhile, June CPI fell to a four-month low of 3.8%, driven largely by weaker goods inflation. Hunter also noted that the labour market is still tight, supporting elevated wage growth, and reiterated that monetary policy is primarily designed to manage demand rather than supply-driven costs such as energy or housing.

The annual inflation rate in Australia unexpectedly eased to 3.8% in June 2026 from both May's reading and expectations of 4.0%, but remained above the central bank's 2–3% target range. It was the softest increase since February, as goods inflation moderated to a four-month low of 3.5%, with transport costs rising at the slowest pace in four months (0.1% vs 3.3% in May) due to falling fuel prices. Inflation also slowed for health (3.7% vs 3.8%) and clothing and footwear (4.9% vs 5.0%). Meanwhile, price growth accelerated for housing (6.8% vs 6.5%), while inflation for food and non-alcoholic beverages remained steady at 3.3%. Services inflation also picked up to 4.0% from 3.7%. The trimmed mean CPI stood at 3.6% yoy, still the highest since September 2024 but below expectations of 3.7%, while the weighted median CPI rose 3.7%, after a 3.6% gain in May. Monthly, the CPI unexpectedly edged down 0.1%, marking its second consecutive monthly decline and defying expectations of a 0.2% rise.